Opposition parties in Russia are accusing Vladimir Putin’s Kremlin of mounting a concerted campaign to shut them out of forthcoming elections and squeeze the life out of the democratic process. Continue reading →

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Russian stocks fell sharply once again on Monday, weighed down by declines in commodities and Asian stocks, with most emerging markets — including the other BRIC heavyweights India, China and Brazil — remaining under heavy selling pressure.

The Russian RTS index recouped some of its early losses, but ended down 3.2% on Monday and is now down 9.6% on the year, making it the worst-performer year- to-date among major global benchmarks together with India. In Mumbai, the benchmark Sensex closed down 3.7%, for a 10% decline on the year.

Tumbling commodity prices, particularly oil and metals, and a rush to reduce global risk exposure are pressuring the Russian market as well as other emerging markets, which tend to have commodity-driven economies. Falling crude oil will likely pressure energy giants such as Gazprom and Lukoil, while declining gold prices might weigh on the country’s leading gold producer Polyus Gold.

“Emotions are still running high with the global rout continuing in commodities and in Asian markets,” said Al Breach, a Russia-based analyst at UBS Investment Research, in a Monday note. “Look for risk-averse sellers to dominate the flow early as any bullish up-ticks will be met with skepticism.”

Besides Russia and India, the other BRIC countries were also selling off on Monday. In China, the Shanghai Composite Index, whose 8.8% fall last Tuesday triggered a global stock-market sell-off, ended down 1.6%, and is now down 4.1% on the year. In Brazil, the Bovespa index fell 1.8% in intraday trade on Monday, and is now down 6.5% on the year.

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Newsweek reportson the antics of the Russian paper bear. Some who wish us ill may tell us that Russia’s weakness means we can ignore them. This is a red herring. It means we have an opportunity to neutralize a future threat, an opportunity that can vanish before we know it. We can stop them now, or wait until the bear is made of plastic and pay a dearer price. We don’t need to fear Russia today, we need to fear allowing the rise of a Russia that we will have to fear tomorrow. The only thing we have to fear is procrastination itself.

Stolid, ramrod-stiff Sergei Ivanov is generally not one to inspire rapturous applause. Yet that’s just what Russia’s former Defense minister did last month when he appeared before Parliament to announce a $189 billion program to rebuild Russian military might. There would be “revolutionary” new intercontinental ballistic missiles, submarines and aircraft carriers, an early-warning radar system and a mysterious “fifth generation” fighter plane. Was it any coincidence that, days later, the commander of Russia’s Strategic Missile Forces, Gen. Nikolai Solovtsov, threatened that some of those new missiles could be “retargeted” at Poland and the Czech Republic? That would be the payback if they agree to host an antiballistic-missile system that the United States aims to deploy in Europe.

If there’s a whiff of cold war in the geopolitical air these days, it clearly has something to do with Moscow’s cherished ambition to restore Russia’s standing as a great power. And that, in turn, requires a world-class military—or at least the semblance of it. After all, the United States has been encroaching on Russia’s turf for a decade, expanding NATO to include former Soviet satellites and, now, unveiling plans for an ABM defense on its borders. Never mind U.S. assurances that the system is designed to thwart rogue attacks from the likes of Iran or North Korea. Wary Russians see it as a first step toward neutralizing their strategic forces—or, as Foreign Minister Sergei Lavrov put it recently, to “launch a first strike.” “The truth,” says Gen. Leonid Ivashov, former deputy chief of the General Staff, “is that the cold war never ended. Russia will always stay America’s strategic enemy.”

And yet, for all the belligerent rhetoric, there’s a big difference between now and the cold war. Then, U.S. intelligence agencies consistently overestimated the Soviet threat. Today Washington wouldn’t make that mistake. When Vladimir Putin blasted America for its “unrestrained” militarism during a recent visit to Munich, U.S. Defense Secretary Robert Gates shrugged it off. Like the Europeans, he seemed more worried by Russia’s massive arms sales—a record $6.7 billion a year, with orders from Iran and Syria—and its willingness to use energy as a political weapon. Beyond that, he recognized what should be obvious to Putin and his fellow nationalists. Russia might speak loudly, but it carries a pretty small stick.

Consider the numbers. Yes, $189 billion is a lot of money. Rising oil revenues have hiked Moscow’s defense budget for 2007 to $31.3 billion, up from $8.2 billion in 2001. Still, that’s less than a third of what the Kremlin spent during the Soviet era. More to the point, the Russian Army is nearly two decades older—and, like an aging man, that much less fit. The reality is that the once vaunted Red Army is in a sorry, if not abject, state.

The problem is not hardware, which can be fixed with cash. To the contrary, Russia has regained its edge in high-tech weaponry with its deadly Komet antitank missile, the Sukhoi-30MKI fighter and a new generation of short- to medium-range missiles. No, Russia’s Achilles’ heel is software—from poor and abused young conscripts drafted, often forcibly, for compulsory military service, to a deeply corrupt officer corps.

Just last month Russian Air Force commander Col.-Gen. Vladimir Mikhailov stunned the Kremlin establishment with a blunt speech. Of the 11,000 young men drafted into the Air Force in 2006, it concluded, more than 30 percent were “mentally unstable.” An additional 10 percent suffered from drug or alcohol problems, while a further 15 percent were deemed ill or malnourished. A quarter of Mikhailov’s soldiers never knew their fathers, 3 percent never knew their mothers and 3 percent were orphans. “Many draftees cannot read or write properly,” says Ivashov, acknowledging the problems cited by Mikhailov. Many recruits barely know how to drive a car, let alone a sophisticated tank, he adds. “It is ridiculous that we let ignorant soldiers use a T-90 that costs $1 million after only six months of training.”

In his speech to the Russian Parliament, Sergei Ivanov declared that “the numerical strength of the armed forces is now optimal. We cannot go any lower” than the 1.13 million currently in uniform. Large as the Army may be, though, it is only as good as its human resources—and those are dismal. Consider another statistic: that some 89 percent of Russian youths escape the draft, often by paying bribes to recruiting officers or the doctors who certify them for service. Thus only the poorest and the worst-educated end up actually enlisting. “By drafting the dregs of society, we create an illusion that all is well in the military,” argues former deputy commander of Russian ground forces Col.-Gen. Eduard Vorobyov, a longtime advocate of switching to a fully professional army. But plans to scrap conscription have been “quietly sabotaged” by the military’s top brass, says defense analyst Alexander Golts, despite a much-trumpeted plan to reduce service from two years to one.

There’s a reason the Army is so wedded to its conscripts. They’re a lucrative source of slave labor and bribes. “The Army is a stinking swamp. It has been absolutely degraded, top to bottom,” wrote Capt. Viktor Bobrov, commander of a motorized-infantry company near Nizhny Novgorod, in his suicide note in January. “Nobody is responsible for anything. All officers do is collect money from soldiers and their parents; all they think about is how to steal more.” Immediately afterward, Bobrov shot himself in the head to avoid embezzlement charges he claimed were concocted by his superiors to cover up their wrongdoing. All told, 67 military personnel—mostly bullied conscripts—killed themselves in January 2007 alone.

Last month the Soldiers’ Mothers Committee of St. Petersburg, an NGO defending conscripts’ rights, publicized the story of Pvt. Dmitry X, drafted in 2005 to serve in an elite communications unit attached to the Russian Army’s northwestern headquarters in St. Petersburg. He thought it would be an easy posting. But within two months of finishing basic training, the 18-year-old learned his real job would be something else: older conscripts, known as dedy, or grandfathers, forced him into working as a male prostitute. “I had to make 1,000 rubles [about $35] every night,” says Dmitry in video testimony provided to NEWSWEEK. “If I failed to bring the money, I was beaten.” Eventually, Dmitry deserted from his unit and now faces criminal charges. “The Russian Army has nuclear missiles that can destroy human life on earth,” says Valentina Melnikova of the Soldiers’ Mothers, who has been monitoring Army life since 1989. “But it’s an institution in the final stages of decomposition.”

Not surprisingly, the Soldiers’ Mothers aren’t popular with the military or the Kremlin. Tales of recruits being used as prostitutes are “made up to discredit the military,” says Interior Ministry spokesman Vasily Panchenkov. Melnikova’s group has become a target of a recent Kremlin drive to shut down inconvenient NGOs. They’ve had to re-register with authorities, with great difficulty, and their activities are now closely monitored. Meanwhile, the Kremlin has apparently decided to combat the very real problems of exploitation and bullying within the military with Soviet-style propaganda. The most recent: a televised theatrical extravaganza last month in honor of the annual “Defenders of the Fatherland Day” holiday that featured Army choirs, dancing Cossacks and teary-eyed World War II veterans with chestfuls of medals.

Flags and public displays of patriotism may help burnish the Army’s image, but they don’t address the deeper problem with Russia’s strategic capabilities. Russian engineers may be excellent at producing tanks and planes—but the only part of the military with any real strategic clout is Russia’s rapidly aging stable of nuke-bearing intercontinental ballistic missiles. Last year Putin touted a new generation of ICBMs, each equipped with warheads that can be independently maneuvered as they re-enter the earth’s atmosphere. Kremlin hard-liners consider this to be their answer to U.S. plans for a new ballistic-defense shield, based around satellites that calculate the trajectory of a missile’s flight and intercept it as it homes in on its target. But in truth, says military analyst Pavel Felgenhauer, Russia’s targetable warheads are just “dusted-off 1980s designs.” What would really worry U.S. defense planners, he adds, is if the Russians built new missiles with an especially fast launch stage, making them impossible to track. So far, though, the talk of a truly new generation of weapons is just that—talk.

In the end, perhaps that’s the point. Putin may well be happy with his Potemkin military. The president’s immediate priority is ensuring a smooth succession for his anointed heir in 2008—perhaps Ivanov, newly promoted to deputy prime minister. Part of that campaign is creating the semblance of a powerful, resurgent military. The danger is that the masters of the Kremlin may come to believe their own rhetoric.

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